At least some portion of the third round of USD 1,400 stimulus checks in the US will find its way to bitcoin (BTC) and possibly ethereum (ETH) and other cryptoassets, analysts say – but there are forces pushing new investors away from BTC.
“NFTs live and breathe on Ethereum, and so do the most popular DEXes, and thus access to altcoins. Retail investors want to explore these, whether expensive jpeg/gif, meme coins, or not, if directed towards crypto investments, their stimulus cheques will likely be spent on “the next bitcoin.” Many of these new entrants are upset they missed some of the earlier rides, and are shooting for the moon with their diamond hands,” Wave Financial‘s Senior Trader Justin Chuh wrote in a recent note.
Furthermore, the expansion of offerings by institutions providing repetitive reinvestments and interest-bearing accounts are “another avenue for money to be steered away from bitcoin and ether.”
Moreover, price-wise, both BTC and ETH dropped from their all-time highs, and could go lower. “So, while the money printing machines continue to go ‘brrrrrrr’, this doesn’t automatically mean bitcoin and all other cryptos are heading higher in the near-term,” Chuh said.
Meanwhile, Jason Deane, a BTC analyst at Quantum Economics, reminded his analysis carried out in August last year. It showed that, in general, poorer Americans used their first stimulus checks to pay essential bills, while those in better financial positions used it for debt, savings, or consumer goods.
This gap between those with and without money “has increased still further over the past year,” but bitcoin is not necessarily “to be the exclusive domain of the rich,” wrote Deane.
Also, his analysis on Gemini‘s report showed that 30% of all UK crypto holders came from households with below-average income, and over 20% of all BTC holders held jobs that are traditionally considered “lower paid.”
The returns on investment of the check into BTC seen so far are also “likely to tempt lower-income families to try and duplicate it,” he said. Deane concluded that certain groups of people will “have a much higher propensity” to buy BTC this time, boosted by increased confidence, crypto knowledge, and ease of access, and added:
As reported, a recent survey of 235 individuals, conducted by Mizuho Securities, estimated that 10%, or nearly USD 40bn in direct stimulus checks may be used to purchase bitcoin and stocks, that bitcoin will account for 60% of total incremental investment spend, and that it could add 2%-3% to bitcoin’s current USD 1.03trn market value.
Also, per Deane, while this small survey might not be very accurate, another survey of 2,191 people carried out by Bloomberg & Morning Consultant in early February “appears to corroborate the results.” Per it, 3% were looking to invest in cryptocurrencies, resulting in a figure of USD 12.3bn to go into BTC and possibly other cryptoassets.
Meanwhile, Mati Greenspan, Founder of Quantum Economics, said that Federal Reserve Chair Jerome Powell and his counterparts at the European Central Bank, Bank of England, and The People’s Bank of China “will continue to double down and “support the economy” by debasing the currency, even as federal governments hand out helicopter money directly to their respective citizens.”
President Biden’s economic advisers are preparing to recommend spending as much as USD 3trn on a sweeping set of efforts aimed at boosting the economy, reducing carbon emissions and narrowing economic inequality, beginning with a giant infrastructure plan that may be financed in part through tax increases on corporations and the rich, The New York Times reported yesterday, citing a person familiar with the situation.
The first stimulus checks were deposited in April 2020.
At the time of writing (15:51 UTC), BTC trades at USD 55,210 and is down by 3% in a day. The price is up by 843% in a year. ETH trades at USD 1,708 and is down by 4% in a day. It rallied by 1,294% in a year.
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